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Market Opportunity Analysis
Market profile
Arkadia’s tourist industry is anchored in its historical attractions with a thriving tourist traffic of 5 million a year or 6% of its population per month. Its hospitality sector also serves its formidable business sector by hosting various conferences throughout the year.
Assuming that each tourist would be spending US$1,000 per trip, that would amount to US$5 billion annual revenue. There are 20 large companies who at the least will hold 2 conferences per year with an average spend of US$10,000 per event. That would amount to US$400,000. Add the same spending of smaller companies at a fourth of that. The total customer market for Arkadia’s tourism and hospitality would be about US$5.5 billion per year.
The constant market segments are the cultural tourists and the conference attendees. There are also two major seasonal markets which are the sports fans of the Continental Football Cup and attendees of the Simulation Development Conference. There is also a market for those sporting in hunting.
The whole hospitality industry is looking at a slight growth over the next months with fluctuations brought on by seasonal events. New laws and limited supply is making the cost of employment rising steadily. Due to the ongoing recession, unemployment had been rising steadily so manpower is generally more than enough.
The successes of the Continental football event and the Simulation conference may signal a trend for these types of event to be held in Arkadia. The food sector is also upgrading to add more spice to all kinds of travelers.
The hotel is a typical one in the city with standard amenities and a restaurant. It can accommodate Arkadia’s leisure and business visitors.
Customer Profile
The cultural tourists are mostly families with grown-up children who can already appreciate history while enjoying other tourist amenities. There are is also a segment from the academe which combines both studies and leisure. Business travelers go to Arkadia for the adequate conference facilities, restaurants and quite cultural atmosphere. Sports fans go here for the annual football event and hunting season. The leisure segment for culture is the biggest but the target market would be for conferences which are expected to still grow. These same customers are expected to stay longer for a few days to enjoy the city’s cultural attractions.
Competitor Profile
The other hotels have price differentiated rooms based on size and quality. Arkadia has only one room type which would meet the requirement of large groups of conference attendees who will have similar budgets for rooms. These kinds of guests would be looking for economically priced hotels like Arkadia with just the basic amenities. The upgraded restaurant would leave room for those who wish to spend more with their personal money.
Distribution Channel Profiles
The traditional travel agencies with associated tour operators would still be good options for the leisure cultural tourists. These agencies can help families plan their trips based on their desired quality of hotel and restaurant. Tourists who are on a limited budget for the hotel because they will also spend for the guided tour can be referred by these agencies to Crown Hotel Arkadia (CHA). The advantage is tourists rely on these agencies for good advice. The disadvantage is they can easily change their recommendation on the slightest change of needs of the customer.
The hotel’s own website can be a channel where customers can book and pay. Purchaser’s for companies looking to book groups of conference attendees would look at all options and would surely find CHA With the hotel’s reasonable pricing, purchasers would likely consider it. The disadvantage is there is a need to maintain an attractive website to represent the hotel well.
General Competitive Position and Value Proposition
General Competitive Position
The hotel has a good reputation and satisfactory service and amenities. It has just been renovated and the maintenance is excellent such that the hotel and restaurant looks new. With a reasonable pricing structure, it can attract the budget-conscious customers like middle-class families, back-packers, students, teachers, conference attendees and sports fans. The upgraded restaurant can be used as the differentiator among other similarly designed hotels. CHA can be known as the basic hotel with a good restaurant. Guests can still have a choice in the menu for standard or premium priced dishes.
The homogeneity of the rooms should be seen as an advantage for conference attendees. Corporate purchasers would choose only one rate for a group of attendees, or there will issues of unequal treatment. With a single rate, the hotel can accommodate for the whole company and they don’t have to be inconvenienced in having different hotels for one company.
The same is true for sports fans whose singular objective is to watch the game, enjoy food and drinks after and go back to the hotel just for the sleep. They feel they don’t need to pay more than a basic hotel.
Value Proposition
As it stands, CHK has the profile of cost leader in Arkadia’s hotel industry. Its basic design and few amenities keep its maintenance costs down. The maintenance though is of high quality which keeps the hotel and restaurant in superb condition at all times. Its lean operations use outsourcing and flexible manpower to keep employment costs down. Training is kept to a minimum and salary rates are kept at industry average level.
References
Crown Hotel Arkadia, Case Description of Hospitality Simulation Game. (n.d). CESIM Hospitality.
Arkadia Trend Report. (2016). Arkadia Tourism Commission.
